COME BACK W, ALL IS FORGIVEN:

The sectors of the private economy most dominated by government--education and health care--are burdened by outdated institutions and irrational economic arrangements. Modernizing both (by breaking union monopolies, deflating the higher-education bubble, and using competition to drive higher-value health care and reduce entitlement costs) would help train tomorrow's workers and avoid crushing them with both public and private debt, and it would help save the safety net for the vulnerable from fiscal collapse. Meanwhile, the sector with the most potential for fueling a near-term boom--energy--is being held back by an administration uncomfortable with newly discovered domestic fossil-fuel reserves.

Reforms in other key areas are also badly needed. A simpler, leaner tax code would reduce the government's drag on the economy and could allow us to focus tax relief on lower-middle-class families struggling under the payroll tax. Monetary policy focused on steady nominal growth could power a real recovery. And reinforcing the work of civil-society institutions to strengthen families and communities could help restrain the disastrous social trends that undermine mobility and hold back the poor.

The political and economic appeal of lower health care, education, energy, and tax bills should be obvious, and the moral force of saving the safety net and combating the collapse of poor families and communities is plain. Yet amazingly, neither party has seriously offered such an agenda. 

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